It’s not often banks get a positive plug, but I’ll put forward National Australia Bank (NAB) for its submissions this week about the importance of Small and Medium Businesses (SME) to the Australian economy, together with an 8 point productivity enhancing reforms package. SME’s accounts for 99% of all companies, two in three of ALL jobs in the nation, 76% of new positions, and $2 trillion in income (56% of total production). If SME’s are 2/3’s of all jobs but “only” 56% of production, it shows we need to look at why and how we can improve effectiveness.
Complexity of hiring is one area. Small businesses spent up to 18.4 hours (!) on compliance before hiring their first employee, 5 times as much as large businesses. This was linked to understanding the 122 awards plus thousands of pay conditions to arrive at a rate of pay.
Excessive Red Tape was another area, and the pleasing part is they managed to quantify this when most others can’t. Tax compliance for instance costs SME’s $90 for every $1,000 in revenue, 225 times higher than the $0.40 it costs large companies. OH&S compliance paperwork was also an onerous area, and 53% of payments from large companies to SME’s are made late (affecting working capital to the tune of $7 billion).
NAB also proposed some concrete and some vague recommendations. Their report urged Governments to change their procurement processes to better reflect SME’s portion of the overall economy. Government targets are for 10% by value of contracts to be to SME’s, despite them making up more than half the economy.
With most of our industry comprising SME’s (often working as sub-contractors for the larger businesses), the focus on SME’s in boosting our economy post-Covid19 should be welcome. And it’s not just monetary values at stake, when you support an SME you are probably meeting the person/s you are supporting, thereby putting back into your own local community.
As always, onwards and upwards!